Australia and New Zealand Banking Group Ltd v Bombay Talkies (S) Pte Ltd and another

• Jurisdiction: Singapore
• Judge: Edmund Leow JC
• Judgment Date: 24 April 2015
• Neutral Citation: [2015] SGHC 112
• Date: 24 April 2015
• Docket Number: Suit No 512 of 2013 (Registrar’s Appeal No 183 of 2014)
• Published date: 29 April 2015
• Plaintiff Counsel: Lim Wei Lee and Liang Hanting (WongPartnership LLP)
• Hearing Date: 12 January 2015
• Defendant Counsel: Assomull Madan DT (Assomull & Partners)
• Court: High Court (Singapore)
• Subject Matter: Civil Procedure,Summary Judgment

Edmund Leow JC: Introduction

Australia and New Zealand Banking Group Limited (“the Plaintiff”) claimed against three corporate clients and their guarantor, who was the director and shareholder of all three companies. The Plaintiff claimed for payments of debts that were due and owing under banking facilities that it had extended to the companies. On 6 May 2014, it received summary judgments for all three suits, which were heard together (Suit Nos 511-513 of 2013). It was also awarded contractual interest and indemnity costs. Dissatisfied with the assistant registrar’s decision, the defendants appealed. On 12 January 2015, I heard Registrar’s Appeal Nos 182-184 of 2014 and dismissed the appeals, varying only the assistant registrar’s costs order. As the defendants in Suit No 512 (Registrar’s Appeal No 183) filed a notice of appeal, I lay out my grounds of decision. Since the appeal was filed only in respect of one suit, that will be the focal point of my decision. However, the facts and arguments were largely similar in all three cases.

Background

The first and second defendants in Suit No 512 are Bombay Talkies (S) Pte Ltd and its director and shareholder, Mr Ramesh Mohandas Nagrani (“the Defendants”). On 10 July 2007, banking facilities were extended to the first defendant, with the second defendant standing in as the guarantor.¹ The banking facilities were amended by four supplemental letters in 23 July 2008, 30 January 2009, 24 November 2010 and 9 November 2011.²

When the banking relationship began, the bank that granted the facility letter was not the Plaintiff but ABN AMRO Bank NV (“ABN Amro”).³ In late 2007, the Royal Bank of Scotland (“RBS”) acquired ABN Amro and its related businesses. This was reflected in the second supplemental letter which ABN Amro sent to the Defendants on 30 January 2009. This letter was sent by ABN Amro but carried RBS’ logo on the letterhead.⁴ In May 2010, RBS’ business was in turn acquired by the Plaintiff, which issued the supplemental letters dated 24 November 2010 and 9 November 2011 to the Defendants. Both supplemental letters were clearly accepted by the Defendants, as evidenced by the signature of the second defendant on his and his company’s behalf.⁵

In this context, the relevant provisions that governed the banking facilities were RBS’ General Facility Provisions. Briefly, cl 7 states that the default interest rate shall be 3% above the interest rate charged on the facilities.⁶ Clause 11 provides for the bank’s legal fees to be paid on a full indemnity basis.⁷ Further, cl 13 allowed the bank to assign, transfer or novate its rights to any other person.⁸ The use of the word “bank” in the facility provisions referred to RBS, its successors and assigns.⁹ The guarantee entered into by the second defendant also states, inter alia, that he is not released from the guarantee by “the transfer or assignment of the benefit of these presents to any person or corporation” and it continues to be “valid and binding for all purposes”.¹⁰

After the Plaintiff’s acquisition of RBS, the Defendants applied to the Plaintiff for trade finance loans pursuant to the banking facility on at least two occasions, on 2 August 2011 and 28 December 2011.¹¹ On 18 January 2012, the Plaintiff sent a notice of payment default to the Defendants for an overdue amount of $84,880.43 and accrued interest.¹² This was followed by two letters of demand on 11 April 2012 and 31 January 2013.¹³ The Defendants made partial payments in the form of cash deposits totalling $8,000 on 11 June 2012 and 25 January 2013.¹⁴ On 31 July 2012, the first defendant instructed the Plaintiff to transfer $156,497.80 from its fixed deposit account to its current account associated with the facilities “to offset our overdraft account with immediate effect”.¹⁵ Following further letters of demand, the Plaintiff commenced Suit No 512 in the courts for the sum of $363,761.54 (as at 27 May 2013), interest on all outstanding sums at the rate of 9% per annum accruing until the date of full payment and costs on an indemnity basis.¹⁶

The proceedings below

Before the assistant registrar, the Plaintiff submitted that it had established a prima facie case on the basis of the documents.¹⁷ It highlighted the “course of conduct over a period of years” showing that the Defendants had accepted the various facilities (including the subject of Suits No 511 and 513) and took the benefit of them without protest until it filed the lawsuits.¹⁸

The Defendants argued, inter alia, that the Plaintiff was not entitled to enforce its rights under the banking facilities because of issues related to the assignment from ABN Amro to RBS and subsequently, the Plaintiff. They also pointed to issues related to missing documents. For example, the facility letter from ABN Amro to the Defendants in July 2007 referenced ABN Amro’s General Facility Provisions and Trade Finance Supplement,¹⁹ but these were not displayed in the affidavits. The Defendants further argued that the RBS’ General Facility Provisions (see [4] above) that the Plaintiff relied on were irrelevant²⁰ and that even RBS’ General Facility Provisions had an express prohibition that barred a third party from enforcing any term of the contract.²¹

The Defendants also asserted that the claimed amount was inaccurate.²² The partial payments totalling $8,000 (see [5] above) were not reflected in the spreadsheet exhibited in the Plaintiff’s affidavit, which showed the breakdown and calculation of the claimed amount.²³ The interest computed also failed to factor in the partial payments and a sum of $16,829 (the $16,829 was an instance of the Plaintiff setting off the credit balance in the first defendant’s account against the money owed to it under the banking facilities).²⁴ The Defendants also took issue with the inconsistent interest rates – either 9% or 10% – that had been used by the Plaintiff.²⁵

Besides ABN Amro’s General Facility Provisions and Trade Finance Supplement, the Defendants also alleged that other necessary documents were missing, including some statements of accounts and the Plaintiff’s trade financing terms for the trade finance loan applications.²⁶

The learned assistant registrar found that the Plaintiff had established a prima facie case for all three suits, including Suit No 512. She found that the missing documents were not necessary for the Plaintiff to establish its claim, which was based on the assignment of the banking facilities from ABN Amro to RBS and then to ANZ. Neither did those documents go towards any disputed issue between the parties.²⁷ She then turned to whether there were any triable issues or bona fide defences raised by the Defendants and found none. First, the contractual exclusion of the Contracts (Rights of Third Parties) Act (Cap 53B, Rev Ed 2002) did not prevent rights under a contract from being assigned to other parties. Second, she found that any allegations of invalid assignment of the banking facilities from ABN Amro to RBS and subsequently, to the Plaintiff, had “no solid footing”.²⁸ It could not be seriously disputed that ANZ had acquired RBS and its related businesses, and that RBS had previously acquired ABN Amro and its related businesses. Nothing suggested that the banking facilities had been excluded during the process of acquisitions. In fact, the documentary evidence, in particular the various supplemental letters, showed the opposite. There was also no legal authority that required the consent of a bank’s customer to be obtained before an assignment of contractual rights could be valid, where there was no contractual term that prohibited assignment. Third, she found that there was no vitiating factor such that the second defendant was not bound by the guarantees he had signed. Lastly, she noted that the defendants had taken issue with the inconsistencies in the Plaintiff’s position in regard to the applicable interest rate on the facilities and the calculation of the amounts owing. However, she considered, inter alia, that the defendants took no position on what the interest rate or correct amounts should be. Neither had they made any contemporaneous objections when they received their statements of account. On the other hand, the Plaintiff had explained its calculations on affidavit and its basis for relying on an interest rate of 9%. In the premises, she found that the Plaintiff had made out its case on the amounts owing and applicable interest rates on a balance of probabilities.

Therefore, she gave summary judgment on all three suits, pursuant to O 14 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed). In relation to Suit No 512, she ordered that the Defendants pay the Plaintiff $363,761.54 being the sum due under the banking facilities as at 27 May 2013 and interest on all outstanding sums at the rate of 9% per annum accruing until full date of payment.

The assistant registrar also awarded a total of $39,000 in indemnity costs, of which $12,000 was for Suit No 512. She rejected the contention that the Plaintiff could not rely on the indemnity costs clause. The Defendants had argued that the indemnity costs clause in the RBS’ General Facility Provisions (see [4] above) did not apply as this was not the document that was referenced in ABN Amro’s facility letter in 2007 (see [7] above). She also rejected the Defendants’ argument that the Plaintiff could not claim indemnity costs as it had included an endorsement for fixed costs of $2,000 in its writ of summons.²⁹ She accepted, inter alia, the Plaintiff’s submission that in its reply to the defence,³⁰ the Plaintiff had clarified that the fixed costs endorsements pertained only to a situation where the Defendants satisfied the claim within eight days of the service of the writ.

The Registrar’s appeals The relevant law

I first lay out the relevant law before proceeding to consider the evidence and arguments that the parties had placed before me,...